NEAT EVALUATION FOR KELLYOCG:
MSP
Market Segment: Talent Management Focus
This document presents KellyOCG with the NelsonHall NEAT vendor evaluation for MSP
(Wider Talent Management focus market segment). It contains the NEAT graphs of vendor
performance, the latest market analysis summary for MSP and a summary vendor analysis
of KellyOCG in MSP. An explanation of the NEAT methodology is included at the end of the
document.
The vendors researched are: Advantage xPO, Alexander Mann Solutions, Allegis Global
Solutions, Capita, DCR Workforce, Hudson, KellyOCG, Pontoon, Resource Solutions, ReThink
Talent Management, TAPFIN, and Volt.
NEAT Evaluation: MSP (Talent Management Focus)
© NelsonHall 2015
1
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
Buy side organizations can access the NEAT tool here.
Vendor Analysis Summary for KellyOCG
Overview
The majority of KellyOCG's MSP clients are large enterprises. Current MSP clients include:

A wind turbine manufacturer, Germany: ~500 contractors in scope

A pharmaceutical, consumer healthcare and animal healthcare products company: in
2002 KellyOCG implemented master vendor and vendor neutral hybrid models for this
client

An automotive organization: annual contingent hires of 1,100. This is a master vendor
relationship; the client piloted KellyOCG's analytics portal and is currently using it as part
of the service

A consumer goods organization: managing a ~$26m spend across 69 suppliers and with
~500 contingent workers

A medical devices, pharmaceutical and consumer packaged goods company: for total
annual managed spend of $1.5bn. The contract started as a master vendor relationship
in 1996 and developed into a global MSP contract. Scope now includes the Americas (U.S
and Puerto Rico), EMEA and Asia Pacific.
Financials
Kelly Services' 2014 revenues were $5,563m, up 2.8% y/y (or up 3.8% in CC) from $5,413m in
2013. The KellyOCG division's revenues were $587m, up 15.2% y/y from $475m in 2013.
KellyOCG does not report MSP revenues separately, but NelsonHall estimates these as $160m
for 2014.
KellyOCG's greatest MSP revenue growth in 2014 was experienced in statement of work
related services; revenues increased ~100% from 2013. The table below shows KellyOCG's
breakdown of spend under management (SUM) by MSP service type.
Exhibit 1
KellyOCG: MSP Spend Under Management by Service Type – 2014
Service Type
Share of SUM (%)
Vendor neutral and hybrid
50
Master vendor
43
Direct hire MSP
4
Statement of work
3
Source: NelsonHall estimate
© NelsonHall 2015
2
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
The majority of statement of work activity is in the U.S. (~70%), with ~15% derived from
Europe.
Strengths

Ability to scale to multiple geographies; capability is demonstrated through its servicing
of 18 global MSP clients

Strong proprietary supply chain methodology applied to managing contingent workforce
acquisition SCOR, GTSC model 2.3

Talent supply chain analytics portal available to clients and recruiters, with the ability to
capture information on both permanent and contingent labor

Breadth of global footprint, with a large client base across Europe as well as being one of
the largest MSP providers in Malaysia, Singapore and South America

Ability to provide blended services with RPO

Significant client base and expertise in manufacturing, pharmaceuticals, energy and
utilities, and consumer services industries

Ability to leverage the global reach of parent Kelly Services, which has delivery locations
and employees throughout the Americas, Europe and Asia Pacific

Certification of recruiters in sourcing technologies and methods, e.g. certifications in
social recruiting, and now also workforce planning, for customers partnering with HCI

Ability to drive new engagements, such as SOW programs.
Challenges

Limited experience in construction, retail, and hospitality sectors

Positioning MSP services alongside its staffing business as a complementary offering,
without threatening revenue generation in staffing, will be a challenge

KellyOCG, being part of the wider Kelly Services staffing organization, is not 100%
independent. Its ability to attract organizations which are using Kelly's staffing services
today may be challenging as Kelly Services has a vested interest in maintaining its staffing
revenues.
Strategic Direction
KellyOCG plans to support its growth primarily through additional service development for
SOW, as well as by marketing its new consulting capability to assist companies in
understanding their savings opportunities by using MSP services. Plans include:

Further developing its SOW offering, particularly independent contractor SOW services

Increasingly targeting consultative engagements, to assess opportunities for expanding
recruitment services to include career transition and vendor management services
© NelsonHall 2015
3
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP

Further developing service models using a talent supply chain approach to support
blended workforce requirements, for both permanent and contingent workforce

Partnering with online freelancing communities to enhance its offering

Further investing in talent supply chain management analytics by adding labor data for
additional countries, to support client demand for key markets.
Outlook
KellyOCG is likely to see additional momentum in 2015 -2016, for the following reasons:

Its analytics tool helps demonstrate savings opportunities through improved contingent
workforce management, and is expected to attract a significant number of clients. The
tool is user friendly and few MSP providers are able to demonstrate a tool that is so
interactive and effective in managing suppliers

KellyOCG's SOW activity is likely to increase, with ~15% of clients likely to adopt these
services in the next two to three years, as client awareness of the benefits of using an
MSP to manage engagements of this nature increases

KellyOCG is one of the few MSP vendors which can effectively service across Europe as
well as having a large U.S. capability

Its recent investments in building out its supply chain management MSP methodology
will be valued by large enterprise companies that are looking for a high level of structure,
to support the management of the contingent workforce.
Furthermore, NelsonHall expects that KellyOCG will likely acquire an RPO company to
supplement its MSP services. This would also enable greater value in an MSP relationship, as
it would enable KellyOCG to compare and manage permanent and contingent workforces
seamlessly, and optimize the blend to suit a client's situation.
© NelsonHall 2015
4
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
MSP: Market Summary
Buy-Side Dynamics
The top drivers of MSP are:

Enhancing compliance and mitigating the risk of using multiple suppliers

Improving cost visibility and cost reduction across contingent worker spend

Consolidation of agencies and improving visibility of agency usage

Enhancing quality of hire in hard-to-fill roles.
The principal benefits derived from MSP are:

Reducing contingent worker costs, on average by 10%

Improving process consistency and cost visibility across countries

Agency rationalization

Reducing time to fill times, on average by 24%

Improving hiring manager satisfaction.
Industries which dominate the market (with approximate share) are financial services (26%),
technology (16%), and manufacturing/engineering (14%). The job functions most
represented are IT (28%), industrial/manufacturing (19%), and administration (15%).
Over the next three years, MSP is expected to increasingly blend with RPO. Approximately
12%-15% of the MSP market is expected to be bundled with RPO services, and this will
increase as buyers look for expanded service scope and have more flexible buying patterns
to meet wider workforce challenges in specific area.
Market Size & Growth
The MSP market is currently focused on vendor neutral models and localized service delivery.
However, there is an increasing appetite for direct sourcing as well as SOW contracts, as
organizations seek greater effectiveness and look for outcome based models.
In addition, MSP services will increasingly blend with RPO services to meet wider workforce
challenges.
Global MSP spend under management (SUM) was $85bn in 2014, growing at 18% to reach
$195bn by 2019. Global MSP revenues were $3.3bn in 2014 and forecast to reach $7.6bn by
2019, with EMA growing at 21% per annum to reach $3.2bn by 2019.
While the MSP market is currently dominated by “vendor neutral”, “SOW” will exhibit strong
growth over the next five years and account for 38% of the MSP market in 2019.
Global MSP contracts will increase in importance and will account for 25% of spend under
management by 2019, with another 25% of the market taking the form of multi-region or
multi-country contracts.
© NelsonHall 2015
5
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
Success Factors
The critical success factors for MSP vendors are:

Establishing capability in new countries through partnership, supplier networks, or
organic growth

Managing change management at local levels

Increased use of analytics for business insight and visibility of the wider market contractor
rates is an important enabler

Building partnerships with clients and obtaining greater visibility of workforce insights of
the client environment as well as the supply base, to better manage the uncertainty in
demand volumes. Workforce consulting capability and analytics offerings are key success
factors

Tapping into multiple talent pools and ensuring passive candidates are targeted, including
integrating with disruptive contingent networks such as freelancer management systems.
Outlook
Over the next few years:

The global MSP market revenue is forecast to be ~$7.6bn by 2019, with a 18% CAAGR

Continental Europe and emerging markets will become increasingly important, and will
account for 34% of the global MSP market

SOW programs will become more important in support of outcome based contracts, with
the direct model increasingly popular for the mid-market

SOW market is expected to grow at 32% y/y CAAGR until 2019, and will account for a 36%
share of the market

Global MSP contracts will account for 25% of spend under management by 2019, with
another 25% of the market taking the form of multi-region or multi-country contracts

Analytics and labor insights will increase in sophistication to support supply chain
management and sourcing

Over the next three years, 12%-15% of the MSP market is expected to be bundled with
RPO services.
© NelsonHall 2015
6
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
NEAT Evaluations for MSP
NelsonHall’s (vendor) Evaluation & Assessment Tool (NEAT) is a method by which strategic
sourcing managers can evaluate outsourcing vendors and is part of NelsonHall's Speed-toSource initiative. The NEAT tool sits at the front-end of the vendor screening process and
consists of a two-axis model: assessing vendors against their ‘ability to deliver immediate
benefit’ to buy-side organizations and their ‘ability to meet client future requirements’. The
latter axis is a pragmatic assessment of the vendor's ability to take clients on an innovation
journey over the lifetime of their next contract.
The ‘ability to deliver immediate benefit’ for the Payroll BPO NEAT assessment is based on
the criteria shown in Exhibit 2, typically reflecting the current maturity of the vendor’s
offerings, delivery capability, benefits achievement on behalf of clients, and customer
presence.
The ‘ability to meet client future requirements’ assessment is based on the criteria shown in
Exhibit 3, and provides a measure of the extent to which the supplier is well-positioned to
support the customer journey over the life of a contract. This includes criteria such as the
level of partnership established with clients, the mechanisms in place to drive innovation, the
level of investment in the service, and the financial stability of the vendor.
The vendors covered in NelsonHall NEAT projects are typically the leaders in their fields.
However, within this context, the categorization of vendors within NelsonHall NEAT projects
is as follows:

Leaders: vendors that exhibit both a high ability relative to their peers to deliver
immediate benefit and a high capability relative to their peers to meet client future
requirements

High Achievers: vendors that exhibit a high ability relative to their peers to deliver
immediate benefit but have scope to enhance their ability to meet client future
requirements

Innovators: vendors that exhibit a high capability relative to their peers to meet client
future requirements but have scope to enhance their ability to deliver immediate benefit

Major Players: other significant vendors for this service type.
The scoring of the vendors is based on a combination of analyst assessment, principally
around measurements of the ability to deliver immediate benefit; and feedback from
interviewing of vendor clients, principally in support of measurements of levels of partnership
and ability to meet future client requirements.
© NelsonHall 2015
7
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
Exhibit 2:
‘Ability to deliver immediate benefit’: Assessment criteria
Assessment Category
MSP Offerings
MSP Delivery
Customer Presence
Assessment Criteria
Vendor neutral offering
Statement of work offering
Direct sourcing offering
Wider talent management/HR capability
Delivery capability in support of N. America
Delivery capability in support of U.K.
Delivery capability in support of Continental Europe
Delivery capability in support of APAC
Delivery capability in support of LATAM
Ability to scale operations
VMS technology delivery
Application of analytics
Level of investment in talent communities
Partnership approach
Ability to benchmark process and offer roadmap
Re-engineering of paper-based processes
Large companies (more than 15k employees)
Mid-size companies (500 – 15k employees)
Small companies (less than 500 employees)
Customer presence in N. America
Customer presence in U.K.
Customer presence in Continental Europe
Customer presence in APAC
Customer presence in LATAM
Multi-country customer presence
Cost savings: improved pricing/negotiations and cost control,
improved cost visibility
Use of low cost locations for labor arbitrage
Identifying key process levers and establishing process
excellence roadmap
Benefits Achieved
© NelsonHall 2015
Rationalization of agencies and elimination of poorly
performing agencies
Ongoing or one-off Lean/Six Sigma process improvement
Improved process and consistency of process
Overall service performance
Support for new country entry
Use of partnerships and vendor management if required
Other benefits achieved
8
Licensed for distribution
November 2015
NEAT Evaluation for KellyOCG: MSP
Exhibit 3:
‘Ability to meet client future requirements’: Assessment criteria
Assessment Category
Suitability to meet future client
needs
Assessment Criteria
Perceived suitability to meet future needs
Overall performance
Delivering streamlined processes to improve user experience
Mechanisms in place to deliver client innovation
Innovation and creativity
Ability to be proactive (ideas for change)
Ability to support the business through change
Strength of partnership
Vendor service culture
Ability to challenge requests for service where appropriate
Value for money
Commercial terms and conditions
Ability to make technology improvements
Understanding wider talent management needs
Support for new country entry
This report covers one of the three separate NEAT market segment evaluations for MSP,
which are:

Overall

Multi-Country Focus

Talent Management Focus.
For more information on these and other NEAT evaluations, please contact the NelsonHall
relationship manager listed below.
Sales Enquiries
NelsonHall will be pleased to discuss how we can bring benefit to your organization. You can contact
us via the following relationship manager:
research.nelson-hall.com
Guy Saunders at [email protected]
Important Notice
Copyright © 2015 by NelsonHall. All rights reserved. This document has been licensed for distribution subject to the Terms & Conditions of the
NelsonHall NEAT Agreement. NelsonHall exercises its best efforts in preparation of the information provided in this report and believes the
information contained herein to be accurate. However, NelsonHall shall have no liability for any loss or expense that may result from
incompleteness or inaccuracy of the information provided.
© NelsonHall 2015
9
Licensed for distribution
November 2015